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The Age of the Platform explores lessons of the platform business model. Phil Simon captures some important lessons of platform development and explains why they are relevant to small business owners.

The Age of the Platform

The Age of the Platform

by Phil Simon

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1.78K reads

Internet: The Beginning

In 1993, the first web browser was released. Originally known as Mosaic, it was renamed Netscape. The internet grew in popularity as people began emailing each other, browsing the net and creating their own pages.

Many businesses sprang up to take advantage of the new technology, ...

By 2005, Web 2.0 gave rise to social media websites. Instead of being the occasional source of entertainment or a place to check email, the internet has become integrated with people’s lives. People’s personal finance and social interactions, to name but two domains, have been transformed.

American companies no longer enjoy local advantages and must now compete against companies from other countries that might have cheaper labour or less regulation. No business is safe from these changing market forces.

Technology has lowered barriers to entry, making it easier and cheaper ...

A platform is an ecosystem that scales easily and encompasses features, users and partners. Platforms allow people to contact each other and exchange information. They make third party collaboration much easier. The platform is a business model.

Even large companies can b...

Monopolies don’t socially optimise resources. Monopolies create barriers to entry, effectively preventing meaningful competition. There’s the controversial notion of natural monopolies when barriers to entry are so high that really only one company can succeed.

AT&T is an example; bac...

  • Platforms aren’t monopolies, as they have a low barrier of entry and do not lock users in.
  • Platforms don’t have the kind of power in people’s lives the way that monopolies are disposed to have, so they don’t generate the same level of hatred.
  • Platform companies tend to have p...

Amazon was predicted to fail in 2001. In response, founder Jeff Bezos decided to grow the company as fast as possible. By 2002, it was the first retailer to make a profit on internet commerce. Today it’s a big success.

It’s helpful to have First Mover Advantage (FMA). Being the first compan...

Customer experience is important. Amazon puts lots of effort into providing good customer service. The importance of customer experience is magnified due to the potency of network effects.

Amazon asks for permission when it uses people’s info. This is a good thing to do. They also let...

At one time, it took 12 clicks to buy something on EBay. In 1997, Amazon introduced 1-Click transactions. They managed to reduce a lot of transaction friction and people gravitated to the site.

How a platform enables smoother and faster transactions is one of the most fundamental ways it ...

Powerful business intelligence software allows the site to make relevant suggestions to users without the clutter of ads the users might not appreciate. Users can rate the products they purchase.

In fact, they can even rate products that they didn’t purchase on the platform. The rating sy...

  • Once upon a time in 1977, there were three fellows, Steve Jobs, Steve Wozniak and Ronald Wayne. They started a little enterprise called Apple Computer. 
  • Famously, Jobs was forced to resign in 1985, only to return to the company in 1997.
  • In the mid-1980s, the company started d...

Good design is part of the brand; Apple products look good and they don’t have extraneous bells and whistles. They are intuitive and straightforward.

Simplicity, ease of use and enjoyment are the qualities that made Apple products great. These are also the qualities that make for great pl...

The App Store has made a lot of money for Apple.

They opened the Application Programming Interface (API), and now the App Store lets them grow even more without having to pay for developers, programmers, servicers or anyone else for these apps. Open APIs made innovation happen faster. Like ...

Founder Mark Zuckerberg is a platform genius. He knew right from the beginning that he wanted the site to be a platform, back when no one was thinking like that. It was founded in 2004 by Zuckerberg and two others.

He learned from other websites that were gigantic failures and made sure tha...

Sergey Brin and Larry Page incorporated Google in 1998. It didn’t take them long to realise that their search engine was limited. Even if they could search and index the web with breathtaking speed and efficiency, people would use the site more if it did more than simply search.

Google adde...

Google has many planks. This keeps users on its platform. This includes planks such as mobile, maps and streaming video. They continue to add more products.

As Amazon, Apple and Facebook did, Google has grown by moving sideways. They also monetized the platform with ads; additionally, the...

  • Google offers a diverse range of services.
  • It has deep personalization with the users.
  • The search algorithm is tailored and fine-tuned to perfection.
  • They offer a majority of their services for free.

There are many properties these four platforms(Apple, Google, Amazon and Facebook) have in common.

  • They all have dynamic stability, meaning they are stable and yet always changing.
  • They are adaptable.
  • They’re all dependent on data and technology. They c...

Facebook pioneered the like button, and now it, or something very much like it, is ubiquitous across the internet. Everyone borrows each other’s good ideas.

Platforms should also cultivate stickiness, provide lots of different features so that it’s convenient for users to stay on the site a...

Major platforms tend to have well known “rock star” executives at the top. Think of Zuckerberg, Bezos, and Jobs. These people didn’t become household names just like that. Platform companies have visionary leaders. They aren’t democratic. Decision making can be done quickly when leadership is str...

Platforms magnify the power of brands. Platform brands can become so powerful they are verb branded, that is to say, the firm’s name describes their core activity.

For example, googling. For Google, this happened because they did their job better than their competitors. The brand has ...

  • Platforms can offer multiple products and services, which can save customers time from having to go to different places. This will keep your customers from going over to your competitors. 
  • Your customers will be grateful to have the convenience of having everything in one place, and ...

Platforms can react quicker to changing conditions than traditional firms. New products can be launched faster. They can respond with great agility to unexpected trends. In a world of continuous change, the ability to be light on one’s feet is essential.

Don’t let your company languish in t...

While platforms are a great business model now in its ascendancy, that doesn’t mean that they are free of problems. Like any field of human endeavour, there is plenty of room for shortcomings and failure. Platforms aren’t always successful, for one thing.

Sometimes they never get off the ...

Platforms aren’t a perfect solution to all the world’s ills. Lots of people dislike any given platform for any number of reasons. Just because an enterprise is a platform is not a guarantee it will do well. Many platforms are unsuccessful and fail. Some examples of platform failures include Micro...

  • Stay simple and as minimal as possible.
  • Eschew bureaucracy. Act small.
  • Traditional companies get bogged down in rules and paperwork that can really hinder innovation.
  • Nurture the community on your platform by staying open and collaborative. 
  • Look for extension...

Perfectionism can be an obstacle to getting things done. Of course, you want to provide a quality product, but at some point, you have to let it go. Focusing on total perfection slows you down. By the time your product is perfect, it might well be obsolete.

Start with the greatest capacity ...

It’s dangerous to cling to safety. Embrace risk. It’s safer.

When you see an opportunity, move quickly. Patience is good in many ways when you build a platform. However, most opportunities don’t stick around for long. The secret is in knowing the opportunities that will bes...

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